APF Welding Pty Ltd v Amplified Contractors Pty Ltd - [2022] FCA 991

FEDERAL COURT OF AUSTRALIA
APF Welding Pty Ltd v Amplified Contractors Pty Ltd [2022] FCA 991

File number(s): TAD 13 of 2021

Judgment of: MCELWAINE J

Date of judgment: 26 August 2022

Catchwords: CONSUMER LAW – sale of business assets – claim for balance of money payable – cross-claim alleging misleading and deceptive conduct as inducing purchaser – misleading representations largely not made out on the evidence or not relied upon – applicant’s claims established saved for return of part of bond money held on trust pursuant to a lease of premises

Legislation: Competition and Consumer Act 2010 (Cth) Sch 2, Australian Consumer Law ss 4, 18, 20, 236, 237

Cases cited:
Addenbrooke Pty Ltd v Duncan (No 2) (2017) 348 ALR 1

Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; [2014] HCA 14

Bofinger v Kingsway Group Ltd (2009) 239 CLR 269; [2009] HCA 44

Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25

Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31

Elna Australia Pty Ltd v International Computers (Aust) Pty Ltd (No 2) (1987) 16 FCR 410

Equuscorp Pty Ltd v Glengallen Investments Pty Ltd (2004) 218 CLR 471; [2004] HCA 55

Hancock v Rinehart (2015) 106 ACSR 207; [2015] NSWSC 646

Harvard Nominees Pty Ltd v Tiller (2020) 282 FCR 530

Henville v Walker (2001) 206 CLR 459; [2001] HCA 52

Julstar Trading Pty Ltd v Hart Trading Pty Ltd [2014] FCAFC 151

Mann v Paterson Constructions Pty Ltd (2019) 267 CLR 560; [2019] HCA 32

Potts v Miller (1940) 64 CLR 282

Sunbird plaza Pty Ltd v Maloney (1988) 166 CLR 245

Watson v Foxman (2000) 49 NSWLR 315

Division: General Division

Registry: Victoria

National Practice Area: Commercial and Corporations

Sub-area: Commercial Contracts, Banking, Finance and Insurance

Number of paragraphs: 166

Date of hearing: 14-17 June 2022, 21 June 2022, 3 August 2022

Counsel for the Applicants: Ms C Scott

Solicitor for the Applicants: Conmoto Group Pty Ltd

Counsel for the Respondents: Ms P Sutherland

Solicitor for the Respondents: Paula Sutherland & Associates

ORDERS

TAD 13 of 2021

BETWEEN:
APF WELDING PTY LTD (ACN 082 179 191)

First Applicant

ANDREW FURMINGER

Second Applicant

AND:
AMPLIFIED CONTRACTORS PTY LTD (ACN 619 872 472)

First Respondent

ADAM BRAIN (and another named in the Schedule)

Second Respondent

AND BETWEEN:
AMPLIFIED CONTRACTORS PTY LTD (ACN 082 179 191) (and others named in the Schedule)

First Cross-Claimant

AND:
APF WELDING PTY LTD (ACN 082 179 191) (and another named in the Schedule)

First Cross-Respondent

ORDER MADE BY:

MCELWAINE J

DATE OF ORDER:

26 AUGUST 2022

THE COURT ORDERS THAT:
1.Furminger Superannuation Pty Ltd must account to Amplified Contractors Pty Ltd in the amount of $28,431.19;
2.The cross-claim is otherwise dismissed;
3.The proceeding is adjourned for further submissions consistent with these reasons as to the form of all further orders including whether judgment should be entered for specified sums in debt plus amounts for interest upon the claim and as to costs.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT
MCELWAINE J:

In approximately 1988, Andrew and Linda Furminger commenced business in the steel fabrication industry from premises at Hale Street Derwent Park, Hobart. They formed APF Welding Pty Ltd (ACN 082 179 191) (APF or the applicant) and remain its directors and shareholders. APF leased the premises from the related corporation Furminger Superannuation Pty Ltd (ACN 636 800 578) (Furminger Superannuation or the lessor) which is the trustee of the SMSF of Mr and Mrs Furminger. Primarily, the business of APF was concerned with commercial steel fabrication for customers in Southern Tasmania. The business was successful and grew over time. To 30 June 2020, the business sales revenue was approximately $2.4m, the net profit was slightly over $100,000 and as working directors Mr and Mrs Furminger received a combined director’s salary of $144,000 plus a superannuation contribution of $50,000. In that year, there were 15 employees.
In early 2020, Mr Furminger who was then 58 began to contemplate retirement. His objective was to sell the business, retain ownership of the premises in his SMSF and enter into a new lease with the purchaser. Mr Furminger was very experienced in the industry, had many business contacts and his business was respected. Mrs Furminger actively worked in the business of APF as an office manager, primarily responsible for bookwork, employee entitlements and accounts.
Adam Brain and Andrew Wicks were also engaged in the business of steel fabrication in Southern Tasmania, primarily in the residential market. They formed Amplified Contractors Pty Ltd (ACN 619 872 472) (Amplified or the respondent) in 2017 and were its directors until July 2021. It was a smaller business when compared to APF. To 30 June 2019, in approximate figures its sales revenue was $1,000,000 and net profit was $37,000 which is primarily explained by a significant wages expense of $408,000.
In early 2020, Mr Brain and Mr Wicks commenced to devise a strategy to expand their business by diversification into the commercial sector in Southern Tasmania, which was largely dominated by steel fabrication firms based in Northern Tasmania. They also perceived that greater efficiency could be achieved, with consequent higher profits, by acquisition of a robotic steel fabrication unit to replace aspects of manual labour and increase the volume of steel that was capable of being processed. In their assessment, no steel fabrication business in Southern Tasmania had that type of equipment at that time. Of course, robotic equipment of that type has a relatively high acquisition cost: at that time in the order of $1,300,000, for which it would be necessary to obtain finance. A requirement of the financier was demonstration that Amplified would be able to significantly increase its turnover of steel. An additional attraction of the robot was that it could replace certain aspects of steel fabrication which were then undertaken by the company InfraBuild, an Australian steel manufacturer and distributor. Mr Steve Harvey was employed by InfraBuild at its Hobart premises. He had regular dealings with Mr Furminger, Mr Brain and Mr Wicks.
In early March 2020, Mr Harvey introduced Mr Brain and Mr Wicks to Mr Furminger, who somewhat surprisingly were not known to each other. They met at the workshop of APF. They generally discussed their respective businesses, Mr Brain and Mr Wicks made it clear that they did not wish to purchase the entirety of the business of APF, but were interested in acquiring its plant and equipment, its employees, its place in the market and its workshop.
At their first meeting no firm proposals were discussed. Mr Furminger relayed this discussion to Mrs Furminger and they agreed that they would offer the business assets at a price of $450,000. There were further meetings between Mr Furminger, Mr Brain and Mr Wicks. A purchase price of $450,000 was discussed. Mr Brain and Mr Wicks made it clear that they could not afford to pay that sum “upfront” and inquired as to whether Mr Furminger would consider some sort of payment plan. Ultimately, they received a positive response, which was conveyed at a later meeting. In short compass, they agreed that Amplified would initially pay $100,000, with the balance payable over a period of two years by secured vendor finance. It was generally agreed that Mr Furminger would become an employee of Amplified for a period of two years in order to assist in the transition of the business and to mentor Mr Brain and Mr Wicks in the business of commercial steel fabrication and delivery.
The vendor finance proposal subsequently evolved such that it was agreed that Mr Furminger would be employed by Amplified at an annual salary of $96,000 plus superannuation for a period of two years and the balance of the purchase price of $140,000 would be paid in quarterly instalments.
By 9 May 2020, the negotiations between the parties were advanced and the primary aspects of the business sale had been settled. To that end, and on that day, the parties entered into a somewhat complex document drawn by the solicitor for APF and with the curious title: Deed of Sincerity of Intention (the sincerity deed). The parties to the sincerity deed were Furminger Superannuation as lessor of the premises, APF as vendor of the business assets, Amplified as purchaser and lessee and Mr Brain and Mr Wicks as guarantors of the obligations of Amplified. Stripped of its multiple layers of complexity, the sincerity deed records that Amplified had “expressed a sincere intention” to purchase the business of APF upon certain terms and, despite the absence of an express option to proceed or election clause, it is clear from the structure and content of the sincerity deed that the expression of such intention did not bind Amplified to continue with the purchase.
The recorded intention of the parties was that in order to proceed, they were required to enter into a business sale agreement on or before 1 August 2020 for a sale price of $240,000, comprising $100,000 payable on completion and the balance of $140,000 payable by quarterly instalments in the form of a vendor loan for a period of two years.
If the purchase proceeded, Amplified agreed to an assignment in its favour of the lease of the premises then held by APF, with certain variations, particularly as to the commencing annual rent in the sum of $88,800. Amplified further agreed to enter into an employment contract with Mr Furminger at an annual salary of $96,000 plus superannuation for a period of two years with a commitment that Mr Furminger would work a maximum of 40 hours per week. Two deposits were required to be paid by Amplified: a non-refundable deposit of $5,000 to APF and a non-refundable security deposit of $48,840 to the lessor, which was later held as a bond under the lease of the premises. These amounts were duly paid. Separately, Mr Brain and Mr Wicks agreed to guarantee the obligations of Amplified, though limited to the lease and the purchase of the business assets.
The intended sale proceeded. The parties entered into three separate agreements: a business sale agreement dated 7 July 2020 (the sale agreement), a deed of lease of the premises dated 27 August 2020 (the lease) and an employment contract dated 27 August 2020 (the employment contract) whereby Amplified agreed to employ Mr Furminger in the position of manager for a two-year period commencing on 1 September 2020.
Regrettably, Mr Furminger, Mr Wicks, Mr Brain and Mr Harvey (from October 2020 when he became a director of Amplified), did not maintain cordial relations for very long. Ultimately, Mr Furminger resigned his employment by notice dated 21 December 2020. On 1 April 2021, APF and Mr Furminger commenced proceedings in this Court and named Amplified, Mr Brain and Mr Wicks as respondents. In short compass, APF claims $140,000 against Amplified for the balance payable pursuant to the sale agreement and which extends to the obligations of Mr Brain and Mr Wicks as guarantors. Separately, Mr Furminger claims $196,987 from Amplified, being an amount calculated in accordance with the employment contract. It should be observed at this juncture that the employment contract contains a quite unusual clause to the effect that if terminated by either party, upon two weeks notice in writing, then Mr Furminger becomes entitled to a termination payment broadly calculated as the balance payable pursuant to the contract from the date of termination, even if the employment is ended for serious misconduct (the accelerated employment payment). This clause was not mentioned in the sincerity deed.
The respondents answered that claim in the form of a notice of cross-claim filed on 20 May 2021. The respondents assert that Mr Furminger, on behalf of APF, engaged in various forms of misleading or deceptive conduct which induced the respondents to enter into the agreements and, at least initially, sought rescission ab initio together with damages pursuant to s 236 of the Competition and Consumer Act 2010 (Cth) Sch 2, Australian Consumer Law (ACL).
For the detailed reasons that follow, I have concluded that the claim succeeds and the cross-claim fails, save for a refund of a part of the bond monies.
The Pleadings
The claim is pleaded in the form of the concise statement dated 31 March 2021, the essential elements of which are as follows. The sale agreement was entered into on 7 July 2020 and required Amplified to pay to APF $240,000, payable as to $100,000 on completion and $140,000 over a period of two years by instalments of $17,500 every three months from completion, which occurred on 1 September 2020. Amplified failed to pay the first instalment on 1 December 2020, which default triggered payment of the entire balance upon the giving of a notice of default, which was duly given on 5 February 2021. Amplified has failed to comply with that obligation, and Mr Brain and Mr Wicks have each failed to comply with their obligations as guarantors.
Separately, Mr Furminger claims that the employment contract commenced on 1 September 2020, that he was paid certain amounts between that date and December 2020 in the amount of $30,129.81 plus superannuation of $2,806.08 and that he terminated the contract by notice in writing dated 21 December 2020, with the consequence that he became entitled to the accelerated employment payment, particularised in the amount of $196,987.11.
These claims were not materially disputed by the respondents in their concise statement in response dated 19 May 2021. Rather, they contended that they were not liable as claimed by reason of the matters pleaded in their notice of cross-claim when read with the statement of cross-claim, each of which were filed on 20 May 2021. The cross-claim was substantially amended on 10 December 2021 and again on 15 June 2022. For reasons that will become clear, it is necessary at this juncture to summarise the material contentions of fact that were first advanced by the respondents in the first iteration of the cross-claim.
First, it was said that during the negotiations for the purchase of the business assets, Mr Furminger made verbal and written misrepresentations as to the approximate total volume of steel processed per annum by APF, its average annual turnover, its average net profit and the ability of Mr Furminger, due to his experience and affiliations in the industry, to continue to attract and secure work in the event of a sale of the business and for the benefit of Amplified.
It was further said that misrepresentations were made as to the safety and suitability of the business premises and that all of these representations were made in the course of trade or commerce and were misleading or deceptive, contrary to s 18 of the ACL. In addition, quite specific contentions were pleaded to the effect that the sincerity deed, the sale agreement, the lease and the employment contract were each signed by Mr Brain and Mr Wicks when intoxicated to the extent that they were not able to comprehend the meaning or effect of those documents, were thus legally incapacitated and that Mr Furminger was aware of and took advantage of that incapacity.
The circumstances pleaded which led to the signing of the sincerity deed were set out at paragraph 8 as follows:
On or about the date appearing on the Deed of Sincerity of Intention, being 9 May 2020:
a.the second and Third Cross-Claimants attended the Property after hours in the company of Stephen Harvey and at the invitation of the Second Cross-Respondent;
b.the purpose of attending the Property, as understood by the Second and Third Cross-Claimants and Harvey at the invitation of the Second Cross-Respondent, was to consume celebratory alcoholic beverages after they had agreed (as pleaded in paragraph 6 above) to enter into the various agreements pleased herein;
c.The Deed of Sincerity of Intention was presented by the Second Cross-Respondent to the Second and Third Cross-Claimants for execution after they had started consuming alcohol;
d.it was not known to the Second and Third Cross-Claimants that a purpose of attending the Property was to execute the Deed of Sincerity if Intention until after they arrived;
e.the Deed of Sincerity was executed by the Second and Third Cross-Claimants at the Property and on the evening that it was presented to them;
f.the Second and Third Claimants were, at the time they executed the Deed of Sincerity of Intention intoxicated, such that they did not understand the legal ramifications of the agreement that they were entering into (Incapacity);
g.the Second Cross-Respondent was aware of the Incapacity.
(Original emphasis.)
Paragraph 13 then addressed the circumstances which led to the signing of the sale agreement, the lease and the employment contract at “a further meeting” as follows:
In relation to the Meeting:
a.it was not known to the Second and Third Cross-Claimants that a purpose of attending the Meeting was to execute the Business Sale Agreement, Employment Agreement and Lease until after they arrived;
b.the Business Sale Agreement, Employment Agreement and Lease were executed by the Second and Third Cross-Claimants at the Meeting and on the evening that they were presented to the Second and Third Cross-Claimants;
c.the Second and Third Claimants were, at the time they executed the Agreements, intoxicated after being given alcohol by the Second Cross-Respondent, such that that did not understand the legal ramifications of entering into the Business Sale Agreement, Employment Agreement and Lease (Further Incapacity);
d.the Second Cross-Respondent was aware of the Further Incapacity.
(Original emphasis.)
Paragraph 15 pleaded “[b]ut for the Incapacity and the Further Incapacity” and the making of the representations, Mr Brain and Mr Wicks would not have signed the relevant documents. Then followed a pleading which particularised why it was said that the misrepresentations “were not accurate or truthful”, and a further contention, commencing at paragraph 20, that by reason of the intoxication incapacity, Mr Furminger engaged in unconscionable conduct contrary to the ACL and in equity. Relevantly the pleading asserted:
20.In the premises of paragraphs 8 to 15 and by reason of the Incapacities, the Second and Third Cross-Claimants lacked capacity to enter into the Agreements by reason of intoxication known to the Second Cross-Respondent, thereby placing the Second and Third Cross-Claimants at a special disadvantage.
21.The Second Cross-Respondent knowingly and unconscionably took advantage of the Incapacities in procuring execution of the Agreements by the Second and Third Cross-Claimants.
22.In the premises of paragraphs 20 and 21, the Agreements are liable to be set aside:
a.in equity and by reason of the Second Cross-Respondent’s unconscionable conduct;
b.pursuant to section 20 of the ACL.
A notable feature of this pleading is that it made no allegation of misleading conduct in relation to the accelerated employment payment clause and how it came to be in the employment contract when it was not mentioned in the sincerity deed.
In August 2021, the respondents chartered a new course, mapped in the form of an amended statement of cross-claim for which leave was granted on 20 September 2021. Amongst other alterations, the incapacity by intoxication contentions were abandoned, as was the claim for rescission of the agreements, and in their place the respondents pleaded: first, material discrepancies between the employment contract and the sincerity deed (primarily the accelerated employment payment clause); misleading conduct by silence in failing to draw attention to the discrepancies and specific oral misleading conduct by Mr Furminger that when the sale agreement, the lease and the employment contract were each signed (but not read) by Mr Brain and Mr Wicks, it was represented by Mr Furminger as follows:
13.Immediately prior to the execution of the three Agreements pleaded in the preceding paragraph, which occurred shortly after they were presented, the Second Cross-Respondent orally represented to the Second and Third Cross-Claimants that:
a.the Agreements were only intended to formalise what was in the Deed of Sincerity of Intention and contained nothing significantly different to what was contained in the Deed of Sincerity of Intention; and
b.if they did not execute the Agreements, then the Deposit and the Security Deposit would be forfeited
(the representations referred to in subparagraphs a) to c) (sic) above are referred to as the Agreement Representations).

At the commencement of the trial, a further application to amend the cross-claim was made to reinstate claims for relief for rescission of the agreements or that they be set aside in equity or pursuant to s 20 of the ACL. These claims were said to have been erroneously deleted when amendments were made on 20 September 2021, the effect of which was to add three paragraphs dealing with a separate works contract for the Rox apartments at 160 Elizabeth Street, Hobart (Rox apartments project), and to amend the particulars of damage by contending that the loss suffered in consequence of the misleading conduct is the amount sought by the applicants in their claim, in the total sum of $336,987.11.
The rationale for the amendment to the particulars requires explanation. It is common ground that Amplified received assets pursuant to the business sale agreement and the lease, primarily it acquired the plant and equipment of APF. It also occupied for a period of time the premises, it conducted a significantly expanded business and it undertook some commercial work in consequence of acquiring the business (although complaint is made that the expected level of commercial work was not received). Amplified did not give notice of any election to rescind the relevant agreements and it did not offer to restore the parties to their pre-contractual positions. No attempt was made by Amplified to identify and then particularise the damage that it claims to have suffered by reason of the misleading and deceptive conduct as the difference between the price agreed to be paid by it to purchase the business and the true value of the business assets as at the acquisition date. Rather, Amplified contends that this is a no transaction case in that, if it had known the true position, it either would not have entered into the sincerity deed, or would not have elected to subsequently enter into the sale agreement, the lease and the employment contract and therefore the damage (in the sense of detriment) suffered by it is the incurring of contractual obligations pursuant to those agreements. Although this argument was not developed by reference to Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31, Black CJ, Gummow and Cooper JJ or Harvard Nominees Pty Ltd v Tiller (2020) 282 FCR 530, Lee, Anastassiou and Stewart JJ, these cases potentially support a finding of damage caused by misleading conduct and assessment of damages in that way.
Leave to amend was opposed. Eventually, during the course of argument, a more limited application for leave to amend was formulated which was not opposed and I granted leave accordingly. The material amendment for present purposes is to the particulars of damage. I refused leave to amend to reinstate the rescission and set aside claims of relief. The final form of the cross-claim is the further amended statement of cross-claim filed on 15 June 2022. For convenience, I will simply refer to this as the amended cross-claim. Although somewhat lengthy, I set out the following paragraphs from the amended cross-claim which I consider necessary in order to understand why I have concluded that the claims made are not established by the evidence which I have accepted. The first relevant pleading concerns the negotiations that were undertaken before the sincerity deed was signed on 9 May 2020, and the pleading at paragraph 4 is:
4.During the Negotiations the Second Cross-Respondent, for and on behalf of the Cross-Respondents made a series of verbal and written Representations to the Claimants, specifically:
a. in relation to the Business:
i.by reason of the works contracts it secured and performed, the First Cross-Respondent turned over a total of approximately 285 tonnes of steel per annum (Steel Representation), which representation was made verbally and in writing by the Second Cross-Respondent;
ii.by reason of the steel turnover pleaded in the preceding subparagraph, the First Cross-Respondent generated an average annual turnover of $2.3 to $2.4 million per annum (Gross Profit Representation), which representation was made verbally and in writing by the Second Cross-Respondent;
iii.by reason facts giving rise to the Steel Representation and the Gross Profit Representation, the First Cross-Respondent generated an average net profit of approximately $300,000.00 per annum (Net Profit Representation), which representation was made verbally and in writing by the Second Cross-Respondent;
iv.due to his experience and affiliations in the industry, the Second Cross-Respondent would, in the course of his employment with the First Cross-Claimant and in selling the Business, (expressed verbally):
(a)attract and secure work for the First Cross-Claimant from larger commercial construction companies, such as Fairbrother, Vos, Hansen Yuncken and Hutchinson Builders as examples (Works Representation);
(b)continue to turnover a volume of steel consistent with the Steel Representation for the business of the First Cross-Claimant (Turnover Representation);
(c)continue to generate profits consistent with the Gross Profit Representation and the Net Profit Representation (collectively the Profit Representations) for the First Cross-Claimant;
b. in relation to the Property:
i.the First Cross-Respondent had operated the Business from the Property for many years;
ii.that it was safe and suitable for the First Cross-Claimant to lease for the purpose of operating its metal fabrication business, including maintaining and operating plant and equipment on-site (Suitability); and
iii.it would be leased by the Third Cross-Respondent to the First Cross-Claimant for the operation of the First Cross-Claimant’s business.
(Original emphasis.)
Then follows a pleading that, in an orthodox way, contends that the respondents relied upon the representations and entered into “certain agreements” which, for reasons that I set out below, is to be properly understood as confined to (at that point in time) the sincerity deed. If the respondents had known the true position, it is said that they would not have entered into the sincerity deed. The terms of the sincerity deed are pleaded in some detail, which I do not consider requires repetition in these reasons, save for stating the effect of the intended employment contract. Clause 5 of the sincerity deed provides:
5.1 Acknowledgements by the Purchaser and the Vendor as to the Employment Contract
The Purchaser and the Vendor acknowledge that:
(a) the Purchaser has expressed a sincere intention that they will employ Andrew on the terms set out in clause 5.2, following the sale of the Business and the Business Assets by the Vendor to the Purchaser;
(b) the entry into the Employment Contract on the terms of this Deed, and with effect post completion of the sale of the Business and the Business Assets, must be entered into by the Completion Date as defined in clause 3.1(b).
5.2 Employment Contract
The Vendor and the Purchaser acknowledge that they must enter into a formal Employment Contract to formalise the specific terms of Andrew’s employment by the Purchaser on or before the completion of the sale of the Business and the Business Assets by the Vendor to the Purchaser, with the Employment Contract to include the following terms:
(a) Andrew will be paid ninety-six thousand dollars ($96,000.00) per annum plus superannuation;
(b) the purchaser will, from the date that the sale of the Business and the Business Assets is complete, pay all operating costs associated with Andrew’s Work Vehicle, including , but not limited to, all costs associated with fuel, registration, servicing, parts, repairs, replacement due to damage, insurance and any other similar costs;
(c) the Employment Contract will be for two (2) years;
(d) Andrew will work a maximum of 40 hours per week, with there being flexible work arrangements whereby, if Andrew works more than 40 hours in any given week, then he can reduce his time in any following week proportionately;
(e)the Purchaser can, if insufficient paid work is available at any point in time during Andrew’s employment, temporarily stand Andrew down from work for a maximum of two (2) months unpaid for that period, but with the payment simply being deferred (“Deferred Payment”), and Andrew will be entitled to the full two (2) years of paid employment, which means that any Deferred Payment must be paid to Andrew at a later date when more paid work is available but it must be paid within the two (2) years of Andrew’s employment; and
(f)the Purchaser will pay the Vendor’s reasonable legal costs associated with negotiating and entering into the Employment Contract.
The amended cross-claim from paragraph 13, moves to subsequent events that occurred “immediately prior” to execution of the sale agreement, the lease and the employment contract, pleading each of the agreement representations that I have set out.
The point of this pleading is that the sincerity deed did not mention that the employment contract for Mr Furminger would contain the accelerated employment payment, which became clauses 9.1, 9.2 and 9.3 of the employment contract as follows:
9.1      The Employer may terminate this Contract:
(a)summarily, if the Employee acts in any way that may be categorised at law as serious misconduct justifying instant dismissal; or
(b)otherwise, by providing the Employee with written notice of termination of at least two weeks, or the balance of the term (whichever is the lesser), and the parties may agree to a lesser period of notice.
9.2The Employee may terminate this Contract by providing the Employer with written notice of termination of at least two weeks, or the balance of the term (whichever is the lesser), and the parties may agree to a lesser period of notice.
9.3If either the Employer or the Employee terminates this Contract with the effective date of termination being prior to the expiry of the term, for any reason (including serious misconduct), the Employer must pay to the Employee, in addition to the Employee's unused annual leave and any other accrued entitlements payable by law on termination of employment, an amount to the Employee calculated as follows:
(A+B)-C
Where:
A = the total gross base salary payable over the term of this Contract, less the gross base salary instalment payments paid to the Employee prior to the date of termination, and for the avoidance of doubt, the parties agree that this amount is not a bonus payment or gratuity, and has the character of a wage payment to the Employee, and is subject to superannuation entitlements pursuant to the Superannuation Guarantee (Administration) Act 1992 (Commonwealth);
B =      an additional amount calculated at the date of termination to offset any difference between any income tax, ETP tax or other tax payable on A, and the income and other taxes tax (sic) that would have been payable by the Employee during the balance of the term, but for the Employer’s termination of this Contract; and
C =      all taxes and other deductions required by law.
The agreement representations are pleaded as having been made in trade or commerce and as being misleading or deceptive in that the employment contract contains the accelerated employment payment term, which was not identified in the sincerity deed and was not otherwise discussed between the parties before the employment contract was signed. In reliance upon the agreement representations, it is said that Mr Brain and Mr Wicks signed (but did not read) the sale agreement, the lease and the employment contract. They did so, according to the framing of the case, in reliance upon the agreement representations and also upon the fact that Mr Furminger was silent as to the existence of the accelerated employment payment clause in the employment contract. As might be expected, it is then said that if the true position had been known, Mr Wicks and Mr Brain would not have signed these agreements and would not therefore have proceeded with the transaction.
Apart from a broad contention that the steel representation, the gross profit representation, the net profit representation, the works representation, the turnover representation and the net profit representation were each “incorrect and untrue” the amended pleading does not particularise why that was said to be the case.
A number of paragraphs in the amended cross-claim next traversed territory that was ultimately abandoned during closing submissions, relating primarily to the condition of the leased premises, a leaking roof and consequent damage to the plant and equipment of Amplified.
Other claims that were also abandoned related to estoppel by reason of the agreement representations, implied term claims as to fitness for purpose of plant and equipment sold pursuant to the sale agreement, breach of the lease in that the premises were not fit for purpose and breach of a duty of care said to be owed by the landlord to Amplified in relation to the state of the premises the subject of the lease.
In the form of the claim finally pressed, that left for residual consideration a debt/quantum meruit claim relating to the Rox apartments project coupled with an unjust enrichment claim for work undertaken by Amplified on that project and for the benefit of APF and, finally, various claims that certain moneys had not been lawfully deducted from the bond paid by Amplified pursuant to the lease, which was deducted after the lease was terminated on 11 March 2021. I return later in these reasons to the precise form of the pleading of these residual claims.
APF, apart from denying each claim of misleading and deceptive conduct, defended the amended cross-claim by a pleading a number of positive contentions, which in summary are:
(a)the respondents made their own inquiries and sought advice, in particular from Mr Harvey, before deciding to enter into the agreements;
(b)the respondents determined to acquire the business in order to demonstrate to their financier that there would be sufficient quantities of steel to be processed in the event that the robot was acquired;
(c)the sale agreement expressly provided for certain warranties by Amplified, in particular that the agreement had been read and understood, independent legal advice had been received (or the right to seek it had been waived) and that it was entered into without placing reliance upon any representations made by or on behalf of APF;
(d)Mr Furminger, as required by the employment contract, did pursue additional work for the benefit of Amplified by preparing and submitting various quotations and tenders;
(e)The work undertaken by Amplified on the Rox apartments project was pursuant to a fixed price sub-contract whereby the amounts entitled to be claimed were determined by specific progress payments and that Amplified expressly agreed to undertake the work on that basis equivalent to 32% of a fixed price of $365,675, ($117,943);
(f)in breach of the agreement to undertake work on the Rox apartments project, Amplified purported to charge APF at a rate per hour for all hours worked, and in any event breached the agreement by not completing the work, which work was required to be completed by APF and at a cost significantly greater than the amount that APF was entitled to submit progress claims for, to the head contractor, resulting in a loss of $55,461, which amount was claimed as a set off against the claims of Amplified; and
(g)the amounts that APF deducted from the bond were lawfully deducted as representing proper charges and expenses incurred by it in restoring the premises to the condition required pursuant to the lease and following its termination.
The Witnesses and their Demeanour
Although the parties filed and exchanged witness statements, the evidence was given before me, save for some expert evidence, viva voce. The respondents, as the cross-claimants, proceeded first and for that reason, I commence with their witnesses. Evidence was first received from Mr Colin Bird, an electrician called in his capacity as an expert. His evidence related to certain aspects of the electrical condition of the leased premises. As those claims were not ultimately pursued, it is not necessary to state the effect of his evidence or to make a credibility finding.
Mr Brain gave detailed evidence as to the business of Amplified, the intended expansion plan, his meetings with Mr Furminger and the material that he relied upon in his decision-making to enter into the sincerity deed and thereafter the sale agreement, the lease and the employment contract. In material respects, his evidence did not match the pleading of the oral representations attributed to Mr Furminger. At times, he gave inconsistent evidence. His evidence was quite unsatisfactory when confronted with inconsistencies between statements made in his witness statement and evidence given orally on the question of whether Mr Furminger made a threat that Amplified would lose its deposit (paid pursuant to the sincerity deed) if it did not proceed with the transaction.
Further, when questioned in cross-examination about the intoxication and incapacity defences (and the circumstances in which each was subsequently abandoned) and whether drafts of the sale agreement, the lease and the employment contract were provided approximately seven days before the final versions were signed, his evidence was so unsatisfactory that I cannot accept it as a truthful account. At critical points his demeanour was quite evasive. He plainly sought to avoid answering questions which he perceived as contrary to the case of Amplified.
On occasions, when confronted with contemporaneous documents inconsistent with his oral evidence he resorted to the not uncommon answer “I can’t remember”. In my view he could remember, but was quite reluctant to acknowledge the obvious correctness of various propositions put to him by cross-examining counsel. A particular example is the evidence that he gave about the agreement to complete the Rox apartments project which, on his version, was “do and charge”. Cross-examining counsel carefully took him to the first invoice that he prepared pursuant to that agreement, which was a claim for a fixed progress payment: not one framed by reference to an hourly rate. He was unable to explain the inconsistency between that invoice and his evidence that Amplified did not agree to undertake the work in consideration of the balance of the progress payments. These aspects of his evidence, and his demeanour, have caused me to carefully reflect upon whether I should accept his evidence on other aspects of this case where it conflicts with the evidence of Mr Furminger and, as I explain, I have concluded that I cannot.
Mr Wicks was the next witness called for the respondents. He explained his involvement in the business of Amplified, his discussions with Mr Brain and Mr Harvey about expansion of its business into the commercial sector, the intended acquisition of the robot in order to make the business more efficient and, similarly to Mr Brain, the course of his meetings and discussions with Mr Furminger which led to his subsequent decision-making to enter into the various agreements on behalf of Amplified and to be a guarantor of its obligations to APF.
Unfortunately, my assessment is that he too gave quite unsatisfactory evidence about the intoxication and incapacity defences (why they were first made and on what basis and why they were subsequently withdrawn), whether drafts of the agreements were provided, and as to his recall of what was attributed to Mr Furminger by the pleaded agreement representations. Although my overall impression of his evidence and his demeanour does not cause me to have the same degree of doubt as I have formed about Mr Brain, and I do not find that his evidence was deliberately untruthful, however, his manner of giving evidence was often desultory, vague and at times inconsistent. A prime example is that he did not give clear evidence about the oral representations said to have been made by Mr Furminger as pleaded in the amended cross-claim and these aspects of his evidence have caused me to carefully consider whether I should accept his account of oral conversations, where they conflict with the evidence of Mr Furminger. As I explain, I have concluded that I cannot.

Mr Andrew Clifford is an accountant and a member of the firm Scanlon Richardson. He gave evidence as an expert for the respondents. He made each of the factual assumptions that he was instructed to make, reviewed certain documents that he identified and expressed the opinion, in substance, that Amplified did not obtain any substantial financial gain as a consequence of entering into each of the agreements in that there was no material increase in profitability, gross or net, and no material increase in steel turnover. It did, however, incur expenses in consequence of the agreements which he calculated to total $331,927.
When cross-examined by counsel for the applicants, Mr Clifford accepted that he assumed, and did not investigate, any of the following:
(a)whether Amplified obtained any additional work in consequence of acquiring the business;
(b)whether Amplified generated any additional steel turnover or profits in consequence of acquiring the business; and
(c)that the additional costs claimed to have been incurred, were actually incurred.
Mr Clifford explained that he had access to the financial account of Amplified, however these accounts are not not identified in, or attached as copies to, his witness statement. He also accepted that he did not undertake an analysis of the profitability of Amplified by comparing profits in the 2019 and 2020 years with the 2021 financial year. A notable aspect of his evidence is that he was not asked to, and did not prepare an opinion about, the true value of the business acquired by Amplified in comparison to the purchase price payable pursuant to the agreements: in other words he did not prepare what is commonly known as a Potts v Miller (1940) 64 CLR 282 assessment.
Mr Rhys Anderson was employed by APF until 2012, thereafter worked as a contractor to APF and from September 2020 became an employee and shareholder of Amplified. He gave quite general evidence of the workload of APF before and after September 2020 and of a conversation with Mr Furminger in June or July 2020 in which Mr Furminger stated his intention not to assist or quote for Amplified after the takeover date. He also stated that no new work was “taken across” from APF to Amplified. In cross-examination he accepted that his understanding of the excluded works (ie work that APF was entitled to complete for its benefit after the takeover) was limited and that Mr Furminger was busy in attending to the excluded works from September 2020. Overall his evidence was of such a general nature that it does not assist me in resolving the essential questions of fact in this proceeding.
Mr Harvey gave considerable and detailed evidence about his involvement in introducing Mr Brain and Mr Wicks to Mr Furminger, his discussions with Mr Furminger about the processing tonnage of steel of APF and the conversations which he separately had with Mr Brain and Mr Wicks. Between 2012 and around August 2020, Mr Harvey was employed by InfraBuild at its Hobart premises. He demonstrated, and explained, his relatively detailed knowledge of the steel fabrication and supply business in Southern Tasmania. Upon ceasing his employment, he became an employee of Amplified on 1 September 2020 and thereafter was appointed as a director in October 2020. At the time of the trial, he was the only director. In certain respects, the evidence given by Mr Harvey is central to the issues in this proceeding, being his discussions with Mr Furminger and his relating those discussions to Mr Brain and Mr Wicks which I address in detail in these reasons. He gave his evidence in a straightforward and non-argumentative manner. He conceded matters in cross-examination, even when not in the economic interests of Amplified: in particular, his concession as “pretty accurate” the steel representation of 285 tonnes commencing in January 2019 and extending to the completion of current work in the latter part of 2020. I have no hesitation in accepting Mr Harvey as an honest witness.
I turn now to the witnesses for APF. Mrs Furminger gave coherent and convincing evidence. She readily acknowledged that some of the figures that she extracted and set out in her email of 20 May 2020 were incorrect in that she had wrongly included some related entity transfers on account of revenue. Surprisingly, she characterised the employment contract as a component of a “payment plan” of the agreed purchase price of $450,000. When asked in examination in chief why the employment contract was for a period of two years she answered:
Because it’s a payment plan. It is not an employment contract. It’s not a – I mean, Andrew did not need a job at this point in time. He was – he did not need a job. We had had a business for 33 years and we were looking to retire. He certainly didn’t need to work for someone else. It was a payment plan. It was a payment plan for the sale of the business, with him helping.
In cross-examination, Mrs Furminger accepted the proposition put to her that the employment contract was a “furphy”, replying “Absolutely. Absolutely.” This case was not pleaded on the basis that the parties were, in reality, bound by some agreement not recorded in the sincerity deed, the sale agreement, the lease or the employment contract. It was not contended that these agreements failed to record the true intent of the parties, should be rectified or otherwise ignored: Cf Equuscorp Pty Ltd v Glengallen Investments Pty Ltd (2004) 218 CLR 471; [2004] HCA 55 at [33]-[34]. No application was made by either party to amend their pleadings in consequence of this evidence and for that reason I decide this case on the basis that the parties are bound by the written agreements as signed. However, my reason for mentioning this evidence is that it is an illustration of the straightforward honesty of Mrs Furminger which characterised the entirety of her evidence, and of which I have no hesitation in accepting as truthful.
Mr Scott Webberley is a qualified electrician of many years of experience who gave expert evidence to the effect that the electrical systems and installations at the leased premises were fit for purpose, which opinion he expressed as based on several visits to the site. In certain respects he disagreed with the contrary expert opinion evidence of Mr Colin Bird. It is unnecessary that I record further observations about this evidence as it became otiose when significant portions of the cross-claim were abandoned during the course of closing submissions by counsel for Amplified.
Mr Furminger was the final witness. He gave a detailed account of the development of the business of APF, the material that he provided to Mr Harvey, Mr Brain and Mr Wicks, his discussions with each of those gentlemen, the evolution of the drafting of the written agreements, and what occurred between September and December 2020 which ultimately led to his resignation as an employee of Amplified. In important respects, his evidence differed from that of Mr Brain and Mr Wicks as to what was said during the discussions which are relied upon by Amplified as constituting aspects of the misleading and deceptive conduct and quantum meruit claims.
Later in these reasons, I address the evidentiary differences in some detail which I resolve adversely to the claims of Amplified. Partly these findings are based upon inconsistencies with contemporaneous documents, partly on the unsatisfactory evidence of Mr Brain and Mr Wicks, but also for the reason that I accept Mr Furminger as an honest witness who gave convincing and credible evidence on disputed questions of fact which was consistent with contemporaneous documents. He was not argumentative. He answered questions clearly and credibly. I detected no attempt in any of his evidence to mislead me. Overall, I prefer his evidence to that of Mr Brain and Mr Wicks and I find according to it.
RESOLUTION OF THE CROSS-CLAIMS
I address the claims seriatim, including those that were ultimately abandoned during the closing address of counsel for Amplified as they remain relevant to my assessment of related claims that are maintained.
The steel representation
The first is the steel representation, pleaded as an oral and written representation that APF turned over approximately 285 tonnes of steel per annum. The primary document that is relied upon is a handwritten note partly authored by Mr Furminger and partly by Mr Harvey. Mr Harvey gave evidence that at a meeting with Mr Furminger, which he stated occurred in late February or early March 2020, a hand written list was prepared commencing with the title “2019 – 2020” which on the left-hand side listed 18 projects by name and the tonnage of steel supplied or processed by APF for each project. Mr Furminger prepared this list from records maintained by APF. The total is 287 tonnes and next to it appears the figure of $2,044,000. This portion of the document is entirely in the handwriting of Mr Furminger. On the right-hand side there is handwriting of Mr Harvey commencing with the words “share of wallet” which, as he explained in his evidence, was the label he employed for market share. Underneath that heading, Mr Harvey recorded the names of familiar builders in Tasmania and provided an estimate in percentage terms of the quantity of steel supplied to each of those builders by APF.
Mr Harvey further explained that he understood that the reference to 2019 – 2020 as the steel turnover of APF commencing in January 2019 and to the end of the calendar year, 2020. In other words, it was clear to Mr Harvey that this document did not represent the turnover in the financial year 2019 – 2020. In his words it represented “works that they had completed, and works that they were to complete by the end of the calendar year 2020.” Mr Harvey further understood that 287 tonnes was an approximate figure.
Mr Furminger gave evidence entirely consistent with the account of Mr Harvey as to the basis for the preparation of, and the subjective meaning of, the figures referred to in this document. He explained that when he met with Mr Harvey, he had “a shelf full of folders” relevant to individual jobs undertaken by APF between 2018 and 2020. He said that he sat down with Mr Harvey, they each examined this documentation and that he recorded the steel tonnages for the individual jobs. He explained that the figures commenced either at the end of the calendar year 2018 or the commencement of the calendar year 2019 and also contained projections for work that was incomplete to the close of the calendar year 2020. He confirmed that the tonnages as recorded by him were accurate. He further explained that $2,044,000 represented his calculated gross sale price for each of the recorded jobs, although he could not recall whether it included or excluded GST.
Mr Furminger did not provide this document to Mr Brain or Mr Wicks: it was agreed that Mr Harvey would and he did. Mr Brain gave evidence that when he viewed this document he understood the reference to 287 tonnes as steel “actually used” between 2019 in 2020. He did not say that he confined this period to that financial year. He acknowledged that it could not represent a single financial year to 30 June 2020, as the document had been prepared before 30 June. It is clear though that he understood the document to be based partly on a projection, acknowledging “they would be the jobs that APF was in the process of doing or had done in that financial year.” He further gave evidence that he could estimate the gross sales of APF by multiplying the steel tonnage by $7000 per tonne which he understood to be the “market rate that the commercial fabricators use”. On that evidence, he could calculate the annual turnover at slightly over $2,000,000.
Mr Wicks, in evidence in chief, stated that his understanding of the figure of 287 tonnes was that it represented “different jobs that [APF] had on the go.” When asked about the figure of $2,044,000 he answered: “that’s the amount of turnover the business was doing that year.” He confirmed that it was Mr Harvey who supplied this document to him and Mr Harvey who explained its content. In cross-examination, Mr Wicks accepted that he simply “just assumed” based on the document and his discussions with Mr Harvey that the tonnage figure represented the financial year 2019 – 2020.
Each of Mr Brain and Mr Harvey accepted in cross-examination that the figure of 287 tonnes was not misleading. Dealing first with Mr Brain, his evidence was:
How did you work out this period, 285 tonnes was wrong?… I didn’t work out that that was wrong.
No. And, in fact, you don’t know if that figure is right or wrong, it could well be the case that there were 285 tonnes through APF in 2019 to 2020?… That’s correct.
Yes. So you can’t say that that figure is misleading, can you?… No. No.
No?... I can’t say that that figure is misleading.
No. Yes. So that – so you’re no longer saying that you were misled in relation to the period 2019 to 2020. That’s not – that’s not your evidence?… That’s not my evidence, no.
The evidence of Mr Harvey when questioned on this topic was that he believed the figure “was pretty accurate”, but in his view what was misleading is that Mr Furminger represented that he would “bring over” a similar tonnage to Amplified.
As I have said, the 285 tonne per annum steel representation was abandoned by counsel for Amplified during her closing address. However, the evidence adduced remains relevant to another issue that is live. Amplified relied upon the steel tonnage representation in negotiating the purchase price for the business and in deciding whether to enter into the sincerity deed. As I explain, the steel representation cannot be separated from the gross profit representation, which properly understood relates to sales revenue rather than gross profit. Acceptance by Amplified that the steel representation was not misleading makes it difficult to accept the reliance case which turns upon the gross profit representation.
There is another document that is relevant to the steel representation. It is an email dated 20 May 2020 sent by Mrs Furminger to Mr Furminger with the subject line “figures”. It reads:
Figures as requested:
17/18 turnover 2.2M Steel:174k
18/19 Turnover 2.3M Steel:175k
19-end April 20 Turnover 2.5M Steel: 374k
This document was printed and handed by Mr Furminger to Mr Harvey. They discussed it. During that discussion Mr Furminger made some handwritten notes on it. For each of the 17/18 and 18/19 years, he wrote 100 tonnes. For the 2019 to April 2020 year he wrote 215 tonnes. In his evidence Mr Furminger explained that he telephoned Mrs Furminger and requested a quick summary of steel expenses for APF by isolating “the top three people that we buy our steel from”. Once he received the email, in conjunction with Mr Harvey, they divided by the market tonnage rate in order to derive the tonnages that Mr Furminger recorded. Mrs Furminger explained in her evidence that the figures she extracted were incorrect. In error she included a line of credit whereby a related entity would transfer money to APF to assist with cash flow. APF would in due course repay the money. The inclusion of that facility inflated the turnover figures. The extent of the error is revealed by the year-end financial accounts of APF. Sales revenue in 2017 was $1,450,000, in 2018 $1,588,000, in 2019 $1,530,000 and in 2020 $2,400,000.
Counsel for APF does not dispute that this document was misleading on its face. The territory of dispute is whether Amplified relied upon this document in entering into the various agreements to acquire the business. On the steel representation issue, however, the reference to 215 tonnes for the financial year 2019 until April 2020 was not misleading for that partial year.
Finally, and for completeness, contrary to the pleading Amplified did not lead evidence that the steel representation was made verbally by Mr or Mrs Furminger. Pleading that a particular representation was made “verbally and in writing”, when it must have been obvious that no case of a verbal representation was able to be made out, necessarily affects my assessment of each of the other representation claims that are maintained by Amplified.
The gross profit representation
The second representation claim is labelled the “gross profit representation”. At the outset it must be said that this label reflects a misunderstanding of what is being referred to. The pleading refers to “an average annual turnover” of between $2.3 and $2.4 million which is a reference to the figures in the email of 20 May 2020. In elementary accounting terms, “turnover”, or total sales revenue, is the gross amount received (if the business operates on a cash accounting basis) or invoiced (if the business operates on an accruals accounting basis) for goods and or services supplied. “Gross profit” is a figure derived by deducting the direct cost of goods sold from total sales. What is clear from the email of 20 May 2020 and the evidence of Mrs Furminger is that the extracted figures recorded sales revenue, albeit inflated by double counting for line of credit transfers. In any event, this error does not affect the substance of the pleaded misrepresentation.
As I have explained, the turnover was wrongly recorded for 2019 and 2020 which is established by the annual financial accounts of APF and I find that in preparing and delivering this document to Mr Harvey (and in turn its delivery by him to Mr Brain and Mr Wicks) APF in trade or commerce engaged in conduct that was objectively misleading or deceptive or likely to mislead or deceive. However, the steel tonnage figure calculated by Mr Furminger at 215 tonnes, plus or minus, was not misleading for the same reasons I have given in finding that the tonnage figure of 287 tonnes was not misleading.
The net profit representation
The third representation claim is that by reason of the facts said to give rise to the steel representation and the gross profit representation, APF verbally and in writing represented that it generated an average net profit of approximately $300,000 per annum. Amplified failed to identify any document which made a representation to that effect, led no evidence about the making of any oral representation as pleaded and Mr Furminger specifically denied making any net profit representation in his evidence in chief. He was not cross-examined on that evidence. All of this explains why counsel for Amplified conceded in her closing address that this case “wasn’t pressed in the trial”, whereupon she abandoned it. Once again, the fact that such a specific, and relatively serious, claim was pleaded but ultimately abandoned as unsupported by the evidence, is reason to be cautious about acceptance of other aspects of the claim of Amplified.
The works representation
The fourth representation claim is a rolled up plea that Mr Furminger by reason of his experience and industry affiliations would “in the course of his employment” with Amplified “attract and secure work” from larger commercial construction companies (the works representation), continue to turnover a volume of steel consistent with the steel representation for the benefit of Amplified (the turnover representation) and continue to generate “profits consistent with the gross profit representation and the net profit representation” (the profit representations). The turnover representation was abandoned by counsel for Amplified in her closing address for the reason that it falls with abandonment of the steel representation. The net profit representation was also abandoned as falling in consequence of the inability of Amplified to prove that any representation of net profit of approximately $300,000 per annum had been made.
Properly understood, the works representation (and what is now left of the profit representations) are each contentions by Amplified that APF engaged in misleading conduct by making representations with respect to future matters within the meaning of s 4 of the ACL, the effect of which is that, if it is established as a fact that these representations were made with respect to any future matter, then the statements are taken to be misleading unless APF adduces evidence that it had reasonable grounds for the making of the representations. Amplified failed to lead clear and direct evidence in support of these representations as pleaded. Mr Brain in his evidence in chief explained that the experience and connections of Mr Furminger was “one of the major reasons why we went into this business arrangement” and expressed that evidence by reference to the goodwill of APF. In part is evidence continued:
I believe that with no Mr Furminger, we weren’t actually receiving anything from APF, apart from the plant and equipment and the lease.… We [were] heavily reliant on Mr Furminger bringing in the work, and the workforce had gone – it had nearly tripled since we had taken over [on] 1 September, so we did need the work to be coming in at that point to keep the employees in jobs, to keep cash flow for the business to operate, and also to pay for the goodwill and Mr Furminger’s wage at the same time. We needed the 30 years of experience that Mr Furminger brought to the contracts, which, you know, me and Andrew Wicks, we didn’t have that experience, so we were really intent on over the next two years of drilling into Mr Furminger’s contacts and his knowledge of the industry and basically without Mr Furminger there, there really was no need for us to buy into this APF agreement.
Was Mr Furminger aware of what you understood his involvement was going to be?… Definitely.
How’s that?… Well, we talked many a time, and even talked post-retirement with Mr Furminger that he may come in every now and then because he didn’t want to leave the industry. He had been involved in the industry for a long time and there’s a – you know, it had been done well by him and, you know, if Amplified became the success that we were all talking about, you know, he would take a level of pride in what he had brought to us.
What was his role, according to you, in relation to securing work?… We expected that not a lot would change in the initial period from 1 September from when Mr Furminger was running… APF that he would continue to get the work in, he would continue to manage the jobs and we would provide him with the assistance with Andrew Wicks to try and streamline a little bit more and try and make his life a little bit easier. So we didn’t have to go out on the tools anymore, he could focus solely on trying to expand the business.
And you said you discussed this with him; what was his response to this request?… As – everything was excitement. So he was excited with the proposal and, yes, we had many discussions on how it was going to be and we hope that, you know, Mr Furminger’s involvement with peter out before the two-year mark, but you know, that would be whether we got the business up and running to the point of what we all envisaged that we would.

In cross-examination, Mr Brain accepted that he and Mr Wicks “relied on past tonnage to make the call of buying into APF”, which I have noted he then accepted was not misleading. He accepted that he understood that Mr Furminger would mentor him and Mr Wicks “to continue to make the kind of profits” that he hoped would be made. He accepted that he had his own plans for the expansion of the business based upon acquisition of the robotic cutting machine. He further accepted that, with effect from 1 September, Mr Furminger would be undertaking work on the excluded contracts, that the business of quoting for and successfully securing work can take months and that he had no expectation that there would be a material increase in turnover and profit within the first 3 to 6 months of the combined business operation. His evidence continued:
So [its] unrealistic to think that you were going to see lots of tonnes coming through or lots of turnover coming through in the first, sort of, three to six months?… Not through the conversations we had. Like, he was actively going to – as I said previously, he was actively going to continue to source the work and keep every – keep the momentum flowing through the business even after – after we took over, and as we had that discussion that if he had quotes or tendered a job previous to 1 September, we would give him x amount of crane profits to pay for his time.
This topic was taken further in re-examination. Mr Brain was asked whether he had any discussions with Mr Furminger in relation to the work that he would bring to Amplified during the course of his employment. He confirmed that discussions to that effect took place and his evidence continued:
The discussions were that he was going to bring the same tonnage and the commercial works over to Amplified as it had always been running.
But under cross-examination, you’ve said that you concede that Mr Furminger would have needed some lead time, if you like, for better – lack of way of putting it, to get those – to get those processes up and running. It wasn’t going to be an instant thing. So what were you expecting – sorry. What did he say to you about having worked there, if anything – sorry. Did he say anything to you about having worked there as at 1 September?… Yes, he did let us know that he did have work, but as of 1 September, he basically said he had nothing.
What did he tell you about having work?...Well, he had the Rox.
He brought them…?... But there was no new big commercial jobs that he had been able to secure.
Did he tell you that he would secure other jobs to bring with him?.. He did, yes.
Can you tell me what he said to you?...It was-basically, the conversation was, as we’re going through- as I was talking to Ms- Ms Scott before, that he was going to continue tendering, and he was going to continue to run the business, so as he moved into AP – Amplified that the business would be just- APF would be just running as per usual, and the – the only big, really- no minor- there would be minor hiccups and no major stoppages of work.
And, as Ms Scott pointed out, the business sale agreement wasn’t signed until July, so you couldn’t realistically expect anything from him before that date? …I would have – as I said – I mean, he – I would have thought he would continue to quote and try and build as much work up as he possibly can to keep, if you know, his current staff. I mean, even his own son was one of the employees in the business, so I would have thought it was in his best interests to keep the work…
His Honour: Don’t tell me what you think. Tell me what he said to you?… He said he was going to continue to run APF the same way that he had, that the work wouldn’t – there was no reason to stop quoting or anything like that.
Ms Sutherland: to the best of your knowledge, was he quoting after execution of the business sale agreement and prior to coming across to Amplified on 1 September?… Yes, to the best of my knowledge, he was.
Do you know if any works came out of that process?… Nothing major, no.
Mr Wicks in his evidence in chief said:
What do you mean you needed him to run the business?… We needed him to help try and secure larger jobs because we only did small residential stuff at the time.
Did you discuss with him anything to do with him securing the larger jobs?… Yes, he said to us on a few occasions that he would be able to secure larger works.
Can you tell me what he said with any more specificity?… Not really, no.
When did he tell you that?… Well, these were part of the ongoing conversations we had with him… starting in February.
So what did you understand then that Mr Furminger was going to do when he came across to Amplified?… Well, I believe that he would be able – he would bring – bring in larger commercial jobs which we were looking to get into.
And did he say he would do that?… Yes.
What did he say?… He said he would be able to – he introduced us to some of the bigger companies in the construction game and he would be able to close and bring in work – what opportunity he would – there would be work when he took over.
There was no relevant cross-examination of Mr Wicks on this evidence. As to Mr Harvey, his evidence in chief was that with acquisition of the business, Amplified could expect to receive the 30 years experience of Mr Furminger together with his industry contacts and he continued:
Well, what was it Mr Furminger was expected to do with his 30 years experience and contacts?… Help us to – help Amplified to secure the works and – and mentor them a little bit in the installation process of the – installation and the fabrication process of the…
And in so far as “helping Amplified to get the works,” to use your words, were you a witness to any discussions between Mr Furminger and/or Mr Brain and Mr Wicks in relation to that concept?… Yes, I was. Yes.
And what was said?… That that’s – that getting the work is the easy part.
Who said that?… That’s Andrew Furminger. Numerous times.
Did he say why he thought that was easy?… Because it’s something that he has done for the last 30 years.
There was no relevant cross-examination of Mr Harvey on this evidence. As counsel for Amplified frankly conceded in her closing submissions, the evidence lacked specificity as to the works representation and the gross profit representation. Most certainly Mr Brain, Mr Wicks and probably also Mr Harvey, had an expectation that by acquiring the business of APF, Amplified could expect to receive future commercial construction work of the type and at a level consistent with established business of APF. Put at its highest, the evidence enables me to find that Mr Furminger, on one or more occasions before the sincerity deed was signed and most likely thereafter before the sale agreement was signed, engaged in general discussions with Mr Brain, Mr Wicks and, at times, Mr Harvey to the effect that he would continue to quote and tender for commercial work after 1 September and that he expected that the commercial work flow would continue. I am not satisfied that Amplified has established on the evidence the specific pleaded matter that Mr Furminger orally represented that he would “attract and secure work…. from larger commercial construction companies, such as Fairbrother, Vos, Hansen Yuncken and Hutchinson Builders as examples”. This is pleaded in the nature of a guarantee or assurance, whereas in evidence it was variously expressed as a discussion to the effect that Mr Furminger would continue to submit quotes and tenders for future work, which I am in no doubt caused Mr Brain, Mr Wicks and Mr Harvey to expect that work flow would continue consistent with the business track record of APF. But that is a very different thing to a representation that quotes and tenders as submitted would be accepted to guarantee (or to use the language of the pleading “secure”) the flow of commercial work.
The evidence does permit a finding that Mr Furminger agreed to become an employee of Amplified to mentor Mr Brain and Mr Wicks in the conduct of the merged business, but any failure to do so is not the pleaded case. Indeed, as the case evolved, and as correctly observed by counsel for APF, a primary complaint is that Mr Furminger failed to remain in the employ of Amplified for two years; but that is not said in the pleading to amount to a breach of contract, representation or warranty. Nor is it claimed that Mr Furminger engaged in misleading conduct to the effect that he would continue his mentoring role for a defined period.
Further, I approach my fact-finding mindful that each witness gave evidence of conversations that occurred over the period from early February to 1 September 2020, without specificity as to what was said in each particular meeting, where no contemporaneous notes or other documents were produced to corroborate the content of individual discussions and where it is clear that the expectations of the individuals has infused and merged with their recollection of the events. The evidence falls short of enabling me to be reasonably satisfied that the pleaded works representation was made on one or more occasions: Watson v Foxman (2000) 49 NSWLR 315 at 318-319, Mclelland CJ in Eq; Julstar Trading Pty Ltd v Hart Trading Pty Ltd [2014] FCAFC 151 at [73]-[74], Dowsett, Rares and Logan JJ. Overall, the evidence is too general and in part was adduced in answer to very leading questions, which I view with suspicion. It is contrary to common sense that individuals who were experienced in the building and construction industry at the time would not understand that a quote or tender submitted for work might not result in securing the work in a competitive marketplace, which was clearly the respective commercial and residential markets in which APF and Amplified operated.
It is also the case that Mr Furminger did continue to submit quotes and tenders and did introduce Mr Brain and Mr Wicks to important industry contacts after 1 September 2020. It is uncontroversial that he submitted a large number of written quotes and tenders for commercial work between 17 August 2020 and 16 December 2020, for a combined total of approximately $3,500,000, very few of which were successful. It is also uncontroversial that Mr Furminger personally arranged for introductions with Hutchinson Builders, Vos Constructions & Joinery Pty Ltd (Vos Constructions), Fairbrother, Hansen Yuncken as the major construction firms, together with smaller firms. It is not contended that Mr Furminger failed to submit quotes or tenders diligently or failed to utilise his industry contacts to arrange introductions.
Accordingly, I am not satisfied that the pleaded works representation was made. As to what is left of the profit representation, the contention is that Mr Furminger orally represented that the business of APF would continue to generate profits consistent with the gross profit representation, which is a reference to the turnover figure of between $2.3 and $2.4m per annum. Amplified failed to lead evidence that he did and Mr Furminger specifically denied doing so in his evidence in chief. One should not confuse this specific representation claim as to future turnover with the historic turnover figures set out in the email of 20 May 2020 and which is not captured by the future profit representation. For these reasons, this representation claim fails.
I need not traverse the next set of future representation claims which concern the suitability of the premises to be leased, as each unfit for purpose claim was abandoned during the closing submission.
Reliance and causation: the turnover representation
I turn to the reliance and causation questions on the turnover representation claim, that I have found was made and was misleading. An initial difficulty is that the pleading at paragraph 6 of the amended cross-claim rolls up each representation into a single contention that Mr Brain and Mr Wicks, relying on the truth of each of the representations pleaded at paragraph 4 (and not otherwise), agreed on behalf of Amplified to enter into “certain agreements” (which are not explicitly identified) “subject to terms being agreed and reduced to writing, to purchase the Business”, to employ Mr Furminger and to lease the property. Where, as I have found, a significant number of the pleaded representations have not been made out, it makes assessment of reliance on one representation with causal effect problematic, although I do not commit the error of requiring reliance to be solely upon the misleading representation that I have found was made: it is sufficient that it was a factor in the decision-making: Henville v Walker (2001) 206 CLR 459; [2001] HCA 52 at [110], McHugh J. On the evidence I must be satisfied that the single misrepresentation of average annual turnover, putting aside each other representation that has not been made out, was relied on and factually caused Amplified to suffer damage. For the following reasons, I am not so satisfied.
First, reliance can only be upon the decision to purchase the business in principle and to enter into the sincerity deed. So much is clear from the structure of the amended cross-claim which chronologically pleads the representations, followed by reliance and entry into the sincerity deed on 9 May 2020. Further, the claim is that in reliance on the truth of the representations, Mr Brain and Mr Wicks agreed to enter into certain agreements to purchase the business, to employ Mr Furminger and to lease the property. In a summary way, that describes the effect of the sincerity deed. The execution of the sale agreement, the lease and the employment contract is later pleaded where two distinctly different inducing representations are relied upon: one that Mr Furminger stated that those agreements were not significantly different to the sincerity deed terms and the other that failing execution of these agreements, the deposit and security deposit paid pursuant to the sincerity deed would be forfeited. The turnover representation was not made until 20 May 2020, at the earliest, and then only when the document was given to Mr Harvey and then conveyed by him to Mr Brain or Mr Wicks (just who and when was not made clear on the evidence but nothing turns on that). It follows that it was not relied on in making the decision to purchase the business, nor to enter into the sincerity deed as these decisions were made prior to 9 May 2020.
Secondly, the turnover representation as pleaded is linked to the steel representation of 285 tonnes per annum: “by reason of the steel turnover”. The abandonment of this aspect of the case, which followed acceptance that Amplified could not establish that this figure was wrong, substantially undermines the claim that reliance was, separately, placed upon the turnover representation. The linkage of those claims by the contention that in reliance on the steel representation and the turnover representation (amongst others) Mr Brain and Mr Wicks resolved to purchase the business and enter into “certain agreements” prevents me making the necessary finding of fact that independently the turnover representation was relied on: it must be accepted that a consequence of abandoning the steel representation is that in reliance upon it, the decision was made to purchase the business and to enter into the “certain agreements”.
Thirdly, Mr Brain gave clear evidence that the turnover figure was not relied on. When asked about his inability to obtain copies of the financial accounts of APF and why he did not obtain a valuation of the business, he said in his evidence in chief:
We weren’t that concerned about the actual financial turnover of APF. We were more interested in now learning about the tonnes that APF were doing. We saw ways that Amplified could modernise APF and turn – if he wasn’t – if APF wasn’t making profit on the jobs, we could turn that around with modernising and different ways of going about doing it moving forwards.
Further, in cross-examination Mr Brain confirmed that the “key information” that was relied upon was the tonnage processed by APF. The questions and his answers were:
Is it correct from your witness statement that the key information was based around tonnage? That was something that was quite important to you in deciding to enter into this…?… Correct.
… business purchase, wasn’t it?… Yes.
Because I think you say in your witness statement, and you’ve given evidence today that you knew a bit about steel tonnage, so if you knew what the figures were, you could work out what you would expect your turnover and your profitability to be?… Correct.
Yes. So it was about tonnage, really. That’s what you were interested in?… Yes.
The cross-examiner went a little further and Mr Brain confirmed that what Amplified sought from the business purchase was “APF’s spot in the market, you wanted to grab their tonnage”. Based on this evidence I positively find that Amplified did not place reliance upon the turnover representation, and this aspect of its claim fails. That finding is fatal as reliance upon the misleading conduct that Amplified complains of is an essential element of its claim for damages or other relief pursuant to sections 236 and 237 of the ACL: in each case it is necessary to find that Amplified suffered loss or damage “because of” the impugned conduct: Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 at [142]-[143], Gummow, Hayne, Heydon and Kiefel JJ. Damage “is the gist of the action”: Elna Australia Pty Ltd v International Computers (Aust) Pty Ltd (No 2) (1987) 16 FCR 410 at 418, Gummow J.
The agreement representations
I turn next to the agreement representations framed at paragraph 13 of the amended cross-claim. The claim is that when the sale agreement, the lease and the employment contract were each presented to Mr Brain and Mr Wicks for signature, Mr Furminger “immediately prior” to execution of each document orally represented that each was only “intended to formalise” and contained “nothing significantly different” from the content of the sincerity deed and if the agreements were not executed, the deposit and the security deposit would each be forfeited. In my view this claim is not made out, either by reference to the actual words said to constitute the representations, or language to the same or similar effect. There are numerous difficulties with the case sought to be made by Amplified which I explain by reference to the following topics:
(a)The date the agreements were signed;
(b)The multiple representation evidence;
(c)The provision of draft agreements;
(d)The intoxication claim;
(e)The recent invention claim:
(f)The deposit forfeiture claim:
(g)Imprecision in the evidence of Mr Brain and Mr Wicks; and
(h)The evidence of Mr Furminger.
I address these matters seriatim.
When were the agreements signed?
There is conflict in the evidence on this question, in particular whether each was signed on the same day. The sale agreement is dated 7 July 2020 and the lease and the employment contract are each dated 27 August 2020. It accords with common experience that sometimes signed documents are dated at a later point in time either by a party or their solicitor and I find that is what occurred in this case. Mr Furminger gave evidence that each agreement was signed on 9 July 2020, which fact he confirmed by reference to evidence that Mrs Furminger collected the hard copies from the lawyer for APF on 7 July 2020. Mrs Furminger stated that the agreements were signed on 7 July, but were not then dated on the advice of her lawyer. In her evidence, she referenced a contemporaneous email exchange between herself and the lawyer for APF between 3 and 7 July 2020 in which Mrs Furminger advised the lawyer on 3 July 2020 that drafts of the three agreements were presented to “the purchasers” on 2 July 2020, that the documents would be reviewed on the following weekend, that “it is all looking good and they are happy” and she expressed her anticipation was that the agreements would be signed “early next week”. On Monday 6 July 2020, Mrs Furminger advised that “…no amendments have been requested” and requested finalised copies for signature, which were provided on 7 July 2020.

The subcontract does contain a term about the scope of the subcontract works in the tender document, which is incorporated as an annexure, and provides for various stages of completion as entitling the submission of progress claims.
I find in accordance with the evidence of Mr Furminger that the agreement whereby Amplified undertook to complete the subcontract works was on the basis that its entitlement to be paid was limited to the submission of progress claims for the uncompleted portion of the works. Unlike Mr Brain’s evidence, Mr Furminger gave clear and convincing evidence of what was discussed, his evidence is consistent with the subcontract and it does not make any sense for Mr Furminger to have agreed to an hourly rate which had the very real potential to exceed the balance progress claims that were entitled to be submitted by APF as the subcontractor. Although there is evidence that Mr Furminger had discussions with Mr Brain to the effect that he would make representations to Vos Construction for variations to accommodate the whole or a portion of the amounts invoiced by Amplified, this is not an acknowledgement by him that the work was to be undertaken at an hourly rate. Ultimately Vos Construction, as was its right pursuant to the subcontract, rejected the variation claims of Amplified, though it did later accept a more limited variation claim submitted by APF.
A further aspect of this case is the set-off that APF claims for the additional costs incurred by it to complete the Rox works in circumstances where it is contended that work undertaken by Amplified did not comply with the subcontract obligations and that APF incurred additional costs in rectifying that work for which it did not receive payment pursuant to the subcontract. Correspondingly, Amplified claims that APF has been “unjustly enriched” in that it received from Vos Construction the balance progress claims pursuant to the subcontract, but has not accounted to it for that money. I was not assisted in submissions as to the legal principles said to entitle Amplified to make a general claim of unjust enrichment in this case: cf Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; [2014] HCA 14; Mann v Paterson Constructions Pty Ltd (2019) 267 CLR 560; [2019] HCA 32; and Bofinger v Kingsway Group Ltd (2009) 239 CLR 269; [2009] HCA 44. I do not find it necessary or desirable to formulate a statement of principle that may apply to this case, as no matter how wide the principle may be, the claim fails on the facts.
The evidence which I accept is that when Amplified agreed to perform the subcontract works, the outstanding progress claims were approximately 32% of the fixed contract some of $365,675, being $117,043. There is no dispute that the first invoice sent by Amplified to APF in the sum of $20,000, exclusive of GST, was paid and that it represented approximately 17% of the work to be completed. In October 2020, Amplified invoiced Vos Construction a further progress claim in the amount of $29,635 excluding GST, which amount was paid to it. That amount was not paid by APF to Amplified. The evidence of Mr Furminger which I accept is that despite requests for an invoice in that sum, none was received.
A further invoice for a progress claim was sent by APF to Vos Construction in November 2020 in the sum of $26,256, excluding GST, for approximately 22% of the work to be completed. This amount was paid by Voss Constructionsto APF, but was not accounted for by it to Amplified.
APF contends that it expended a further sum of $97,461 to complete the subcontract work after Amplified ceased performing work on the Rox apartments project. In summary, Mr Furminger explained that in late November 2020 he was approached by Mr Harvey and then by Mr Brain and was informed that amplified intended to remove its employees from the project: the language employed was that they “were pulling the guys off” because they were losing money on the job. In elaboration, he was told that too many hours were being devoted by the employees to the project, it was costing too much money and that Amplified was losing money. This discussion occurred on more than one occasion, and at times became heated. It was made plain to Mr Furminger that Amplified would not recommit its resources or employees to the project. On or about 15 December 2020, Mr Furminger reached an agreement with a manager from Vos Construction to the effect that APF would recommence work on the project and would be “cut a little slack” with respect to the completion deadline. Accordingly, Mr Furminger took the necessary steps to engage employees to undertake the work necessary to complete the project. He undertook a considerable amount of the project management himself.
After APF had recommenced work on the project, Mr Furminger became aware that work had not been correctly undertaken by Amplified in discussions that he held with the construction manager of Vos Construction. He was informed of outstanding works that required completion, or completed works that required correction. He gave evidence that the work that had been performed by Amplified “it wasn’t finished up to the quality standard that they wanted”. Mr Furminger was then taken to a number of bundles of invoices and timesheets, which evidence the number of hours spent in remediation work on the project, cost of engaging employees and the cost of materials supplied. It is not necessary that I essay all of this evidence, or even summarise it for the reason that none of it was challenged in cross-examination. I accept both that the work was undertaken by APF, was necessary for the purpose of achieving compliance with the subcontract obligations and that the time spent and the cost of materials supplied were each reasonable. I further find that this work would not have been necessary but for the fact that Amplified failed to complete the work that it undertook to complete and/or that certain components of the work as performed by it did not conform to the contractual specifications of the subcontract.
The ultimate result is that APF has a claim for $97,461 from Amplified, but must set-off from that claim the amounts received by it from Vos Construction and for which it did not account to Amplified in the total sum of $55,891, which leaves a balance of $41,570. However, APF does not claim this amount from Amplified for the reason that Mr Furminger explained in his evidence: ultimately, APF submitted an additional claim for $42,000 to Vos Construction as a variation, which amount was paid to it.
The Bond Claim
The final item of claim in the amended cross-claim is for an account of money paid by Amplified to the third cross respondent, Furminger Superannuation, being the bond amount of $48,804 paid pursuant to the lease. It is common ground that the lessor retained the bond in order to cover various expenses claimed to have been incurred by it in restoring the leased premises to the condition required by the lease terms, and following vacation of the premises by Amplified in March 2021. During closing submissions, counsel for Amplified conceded a number of the claims that had been formulated in the amended cross-claim such that the quantum in dispute is the relatively modest sum of approximately $25,000 for 7 items. Those claims are:
…
d.        Electrical Repairs Faulty Equip (Bisset) $467.50
e.        Electrical Repairs Faulty Equip (Dynamic) $665.00
f.         Damaged Door Repair Annexe $3410.00
g.        Banana Bin Hire $920.00
h.        Clean up of Workshop and Yard $10,582.00
i.         Clean of Office and Amenities $2,217.00
j.        Replace missing APF Welding property $6,837.24
Amplified contended, but then abandoned in its closing submission, that no amount could lawfully be deducted from the bond as a notice of default had not been given. The lease does not require notice of that type to be given and, in any event, Amplified repudiated the lease when it vacated the premises on 10 March 2021, which repudiation was accepted by re-entry by the lessor.
What is left is a quite generalised claim to the effect that the lessor wrongly purported to deduct money from the bond for reasons related to the condition of the premises, denial that the premises were left in an unclean state, assertion that access had not been afforded to attend to the post termination obligations of Amplified to restore the premises and that some deducted items were inadequately particularised. The remedy sought by Amplified is an account and payment to it of any money not correctly deducted.
The lessor is an accounting party in that by clause 10.2 of the lease it is a trustee for the benefit of Amplified. Thus, the first question is whether an account has been provided as required by clause 10.4, the effect of which is that any appropriation of the bond money must be accompanied by itemisation of the lessor’s claim and a reconciliation. The right to appropriate is conferred by clause 10.3 “if the Lessee defaults in any obligation under this Deed”. A reconciliation was provided and is exhibited in this proceeding. It was provided by Ms Scott to Ms Sutherland on or about 10 May 2021. The appropriated amounts total $41,363.21 and the document on its face satisfies the lease obligation to itemise each claim made by the lessor and to reconcile those claims with the amount of the bond paid. Accordingly, the claim that the lessor has failed to account is not made out.
There is no provision in the lease which makes the itemisation of the amounts claimed by the lessor, or their quantum, conclusive and binding upon the lessee. In consequence it is open to the lessee to contend that either it did not default in a relevant lease obligation or that an amount appropriated exceeded loss suffered by the lessor by way of “outstanding rent or other monies or for compensation of breach of covenant” within the meaning of clause 10.3 (a) of the lease.
The first item now in dispute is $467.50 as invoiced by Bisset Electrical. The invoice for this item is dated 20 April 2021 and is concerned with a call out on three occasions to investigate the reason for the tripping of an electrical switch. One reason attributed on the invoice to that fault was the existence of a faulty grinder. The contention in the amended cross-claim is that the cost was incurred in an attempt to identify and repair faults with the electrical infrastructure at the premises, which were not caused or contributed to by the lessee. There was no direct evidence of what this claim relates to and why the work was necessarily undertaken by reason of breach of a lease obligation. At a high level of generality, Mr Brain in evidence in chief was questioned about this item and the next following one being an amount of $665 paid to the firm Dynamic described as electrical repairs to faulty equipment. He stated that he did not know when this work was done but in answer to the question “to the best of your knowledge, did you cause damage to any of the equipment that I’ve just read out – that would necessitate repairs or replacement” he answered that he did not. There is in evidence a tax invoice from Dynamic Electrical dated 20 April 2021 which in very general terms describes repairs to and the replacement of some three-phase circuit breakers. The invoice does not attribute any cause of failure.
In an account claim the onus is upon the accounting party to justify any item that is disputed by the person to whom the accounting duty is owed by individually itemising each receipt and payment supported by vouchers where they exist: Hancock v Rinehart (2015) 106 ACSR 207; [2015] NSWSC 646 at [353]. Evidence was not adduced by the lessor to the effect that this work was necessarily undertaken because of an identified breach of the lease by Amplified. That omission, together with the evidence of Mr Brain which I accept, requires that these two claims of Amplified be upheld.
The next item is an amount of $3,410.00 which relates to the repair of a workshop door, about which considerable evidence was adduced. The invoice for this work is from Home Repairs and Maintenance and is dated 18 April 2021. It describes the work as “replacement of damaged tracks and rollers and repair a bent/damaged doors on workshop”. That description differs from the evidence. In short the door to the main workshop at the premises is operated by a sliding rolling mechanism. According to the evidence of Mr Wicks it “was always hard to open and close", would often slide off the edge of the rolling mechanism and in his belief “the door was too heavy for the tracks and the rollers". When it was put to Mr Furminger in cross-examination that the door infrastructure “was absolutely rusted out", he disagreed, and he further disagreed with the suggestion that the building was old and in a state of disrepair.
Mr Brain gave evidence similar to that of Mr Wicks on this topic and he specifically denied that any employee of Amplified was responsible for the door dislodging from its track. When asked in cross-examination his view as to what caused the door to dislodge, he answered “wear and tear". However, a little later in his cross-examination he gave an inconsistent answer to the proposition that the door was in working order at the commencement of the lease (with which he agreed) and he answered “that is correct” to the proposition that the door was damaged during the period of occupation of the premises by Amplified.
In my view that last answer by Mr Brain must not be taken out of context: it is technically true that the door dislodged whilst Amplified was the lessee. Clause 4.10 of the lease imposes an obligation upon the lessee to keep the interior of the premises in “clean, good and substantial repair and condition, fair wear and tear and acts beyond the control of the Lessee excepted". The roller door is a structural element and forms part of the exterior of the workshop which is the maintenance responsibility of the lessor pursuant to clause 7.2 of the lease. Accordingly, it was not the obligation of the lessee to maintain the roller door. Further, I am not satisfied on the evidence that any negligent or deliberate act of any employee or agent of Amplified was causative of the door failure. As to that portion of the invoice which references a bent/damaged door, the difficulty is that the cost of attending to this repair is not separately apportioned, even if I had concluded that there was sufficient evidence to the effect that it was damaged by an employee of Amplified. For these reasons, I am not satisfied that this amount was lawfully deducted from the bond.
The next item is a claim for $920 for the hire of Skip bins from the firm Banana Bin Hire which was invoiced on 29 March 2021 and which covers four days. The evidence of Mr Furminger was to the effect that it was necessary to comprehensively clean the untidy state of the premises before a new lease could be entered into with another party. Mr Wicks gave evidence in chief that upon vacation “to the best of our ability” the premises were made clean and tidy. However, in cross-examination he accepted that there was “still more cleaning up to be done”. Importantly however he gave further evidence that when Amplified occupied the premises “it was a workshop, so there was just a fair few years of stuff lying around" and by way of further clarification said “offcuts of steel, old machinery, old projects that weren’t – were wrong or had to get – had to make new stuff, so the old job was just still sitting there". Mr Harvey gave evidence that within the first few weeks following the takeover on 1 September, in order for the apprentice employees to have something to do, they were directed to “clean the place up”.
I accept that the leased premises were not spotlessly clean at the commencement of the lease: after all, what was taken over was a metal fabrication workshop that had been established for approximately 30 years. The lease did not specify any particular condition of the premises at commencement. In contrast, Mrs Furminger gave evidence that upon reoccupation of the premises, she and her husband repainted the office building, re-carpeted it, cleaned extensively and gardened to the point that “we scrubbed and we had it pristine, ready to go". When questioned as to what she meant by that she answered: “well, as pristine as an old workshop can be, that’s a fabrication, it was ready to go.” She further gave evidence that the reason for the hire of the bins was to “get rid of everything" as “you could hardly move in there. It was just strewn with rubbish everywhere, and it was just clean up, clean up, clean up." When cross-examined on this evidence, she “completely disagreed” with the proposition that the leased premises were not clean and tidy as at the commencement of the lease.
Mr Furminger gave similar ever evidence to that of Mrs Furminger on this topic. In cross-examination he specifically disputed the proposition that upon commencement of the lease “there was stuff everywhere". But he then was questioned as to why it was the case that he claimed for 148 hours of his time, and that of employees of his business, to clean the premises following the termination of the lease and he answered as follows:
Well, the thing is that the reason why we went in and done such a thorough clean is that we had a different business coming in with a million – state-of-the-art million-dollar machineries – multimillion dollar machines coming in there. It had to be – it was to your client’s advantage that we cleaned it up thoroughly and got people in there as quickly as possible, they was liable for the ongoing rent.
So it was cleaned up more thoroughly, though, wasn’t it for the crane business than it was for my clients, wasn’t it?… Because it’s a different application.
So it was to suit the new tenant?….Correct.
On the evidence that I have set out, I am not satisfied that the skip bin hire charge was incurred by the lessor because Amplified breached its maintenance obligation at clause 4.10 of the lease or, additionally, breached its delivery up obligation at clause 4.20 to remove all signage, clean all interior surfaces to the satisfaction of the lessor, clean all floors windows and work surfaces to the reasonable satisfaction of the lessor and repaint and treat all interior surfaces to the reasonable satisfaction of the lessor. The subject matter of the lease was an industrial metal fabrication workshop, of considerable age. Whilst it is true that the landlord, following breach of the lease, took steps to mitigate its loss by securing another tenant, the standard to which the premises were cleaned and made good was something required by that tenant and is not attributable to a breach of the obligations of Amplified at clauses 4.10 or 4.20 of the lease. The lessor makes no separate claim for the cost incurred in mitigating loss following vacation of the premises. For these reasons the skip bin hire charge should not have been deducted from the bond.
The next item of claim is $10,582 described as “clean up of workshop and yard" which claim is the subject of an invoice sent by APF to the lessor dated 15 April 2021 calculated as an hourly charge of $65 per hour for 148 hours to remove rubbish and tidy the premises. For the same reasons that I have given in relation to the skip bin hire charge, this amount should not have been deducted from the bond, and even if some portion of it might be attributable to a failure by APF to comply with a particular lease obligation, the invoice is not drawn by reference to that distinction.
The next claim is for $2217 described as “clean of office and amenities", which is the subject of an invoice from the Kingborough Carpet Centre of 6 April 2021. It describes the work as “general cleaning and windows, carpet cleaning". As I have noted, the lease contains a specific obligation at clause 4.20 to clean all interior surfaces including windows and work surfaces to the reasonable satisfaction of the lessor. The difficulty with this claim is that I have no evidence as to whether the cleaning described in the invoice reflected a failure by the lessee to comply with this obligation, in particular one to the reasonable satisfaction of the lessor, and where I have clear evidence that the premises were put in a better state of presentation in order to secure a new tenant. As the onus to justify this deduction falls upon the lessor, I find that it has not been discharged with the consequence that this amount should not have been deducted from the bond.

The final disputed bond item is an amount of $6837.24 described as “replace missing APF welding property”. For this item there is a quotation, but notably not a tax invoice, from Blue Scope Steel dated 4 May 2021, for various items of fabricated steel being universal beams, channels and something described as “rectangular hollow sections”. No oral evidence was adduced from any witness as to what this claim relates to and for that reason, I find that the lessor has failed to discharge its accounting onus with the consequence that this sum cannot be withheld from the bond money.
In the result, Amplified has achieved very limited success upon the amended cross-claim and to the extent that the lessor must account to it in the total sum of $28,431.19 (being the bond amount of $48,840 less items not in dispute that total $20,408.81 and which accounts for the total of the items resolved in favour of Amplified, $25,098.74).
THE CLAIMS OF THE APPLICANTS
These claims are able to be addressed succinctly, as all matters of defence to the concise statement are premised upon success of the cross-claims.
The first claim is for a declaration that Amplified, Mr Brain and Mr Wicks are indebted to APF in the sum of $140,000 being the balance money payable pursuant to the sale agreement. There is no dispute that this money has not been paid. Nor is any matter of defence raised by Mr Brain or Mr Wicks to the effect that they are not liable pursuant to their respective guarantee of the obligations of Amplified to make this payment. The grant of declaratory relief is discretionary. Amongst other considerations there must be utility in the making of a declaration. I am not satisfied that there is utility in granting the declaratory relief sought in this case to the self-evident reason that executory relief, in the form of judgement in a particular sum is the more appropriate remedy. Further, the declaratory relief sought in the originating application does not address the claims for interest.
The second claim is for a declaration that Amplified owes to Mr Furminger the amount of $196,987.11 which is the calculated accelerated employment payment pursuant to the employment contract. There was no dispute at the trial to the effect that this amount has been incorrectly calculated. I am satisfied that the calculation is correct. However, for the reasons just stated I do not consider that there is utility in making the declaration that is sought.
The third claim is for damages for breach of contract. I am not satisfied that APF or Mr Furminger have claims for damages for breach of contract, as distinct from claims in debt. The sale agreement provides at clause 4.2 that the balance purchase price of $140,000 “forms a debt due and payable” by Amplified to APF and is described as a loan by reference to the deed of sincerity which in turn at clause 3.2(a) describes the balance payable as a “vendor finance arrangement” secured by an equitable charge, repayable over a period of two years by equal quarterly instalments. There is a further document between APF, Amplified, Mr Brain and Mr Wicks dated 7 July 2020 described as: Secured Loan Agreement, which contains a default clause whereby APF may terminate the loan in the event of a breach by Amplified. If that power is exercised then the entire balance of the loan together with interest becomes immediately payable. It is not in dispute on the pleadings that APF exercise that power by notice in writing dated 5 February 2021. Accordingly, the amount of $140,000 became payable by Amplified to APF in debt. Amplified has not paid the debt. It is that debt which has been guaranteed by Mr Brain and Mr Wicks. Thus the claim that APF has is in debt, rather than in damages for breach of contract. That is also true for the claim based on the guarantees which is for debt, not damages in that the guarantee provides that the “guarantor guarantees to [APF] that [Amplified] will duly and punctually perform the [obligations of Amplified] under this Agreement…”. Breach of that obligation gives rise to a claim in debt: Sunbird plaza Pty Ltd v Maloney (1988) 166 CLR 245 at 255-256, Mason CJ. I mention that a claim in debt is formulated in the concise statement, but is not reflected in the relief claimed in the originating application. In that circumstance, it is appropriate that I receive further submissions from the parties before making final orders in this proceeding.
Amplified also seeks unspecified and particularised amounts for interest together with legal costs on an indemnity basis. I did not receive any submissions from either counsel on these claims. Accordingly, I adjourn for further submissions the form of precise orders which are sought in relation to these claims.
Conclusion
For these reasons I make the following orders:
1.Furminger Superannuation Pty Ltd must account to Amplified Contractors Pty Ltd in the amount of $28,431.19;
2.The cross-claim is otherwise dismissed;
3.The proceeding is adjourned for further submissions consistent with these reasons as to the form of all further orders including whether judgment should be entered for specified sums in debt plus amounts for interest upon the claim and as to costs.

I certify that the preceding one hundred and sixty-six (166) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McElwaine.
Associate:
Dated: 26 August 2022
SCHEDULE OF PARTIES

TAD 13 of 2021

Third Respondent

ANDREW WICKS

Cross-Claimants

Second Cross-Claimant:

ADAM BRAIN

Third Cross-Claimant:

ANDREW WICKS

Cross-Respondents

Second Cross-Respondent

FURMINGER SUPERANNUATION PTY LTD (ACN 636 800 578) AS TRUSTEE FOR THE FURMINGER SUPERANNUATION FUND

File number(s):	TAD 13 of 2021
Judgment of:	MCELWAINE J
Date of judgment:	26 August 2022
Catchwords:	CONSUMER LAW – sale of business assets – claim for balance of money payable – cross-claim alleging misleading and deceptive conduct as inducing purchaser – misleading representations largely not made out on the evidence or not relied upon – applicant’s claims established saved for return of part of bond money held on trust pursuant to a lease of premises
Legislation:	Competition and Consumer Act 2010 (Cth) Sch 2, Australian Consumer Law ss 4, 18, 20, 236, 237
Cases cited:	Addenbrooke Pty Ltd v Duncan (No 2) (2017) 348 ALR 1 Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; [2014] HCA 14 Bofinger v Kingsway Group Ltd (2009) 239 CLR 269; [2009] HCA 44 Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 Elna Australia Pty Ltd v International Computers (Aust) Pty Ltd (No 2) (1987) 16 FCR 410 Equuscorp Pty Ltd v Glengallen Investments Pty Ltd (2004) 218 CLR 471; [2004] HCA 55 Hancock v Rinehart (2015) 106 ACSR 207; [2015] NSWSC 646 Harvard Nominees Pty Ltd v Tiller (2020) 282 FCR 530 Henville v Walker (2001) 206 CLR 459; [2001] HCA 52 Julstar Trading Pty Ltd v Hart Trading Pty Ltd [2014] FCAFC 151 Mann v Paterson Constructions Pty Ltd (2019) 267 CLR 560; [2019] HCA 32 Potts v Miller (1940) 64 CLR 282 Sunbird plaza Pty Ltd v Maloney (1988) 166 CLR 245 Watson v Foxman (2000) 49 NSWLR 315
Division:	General Division
Registry:	Victoria
National Practice Area:	Commercial and Corporations
Sub-area:	Commercial Contracts, Banking, Finance and Insurance
Number of paragraphs:	166
Date of hearing:	14-17 June 2022, 21 June 2022, 3 August 2022
Counsel for the Applicants:	Ms C Scott
Solicitor for the Applicants:	Conmoto Group Pty Ltd
Counsel for the Respondents:	Ms P Sutherland
Solicitor for the Respondents:	Paula Sutherland & Associates

TAD 13 of 2021
BETWEEN:	APF WELDING PTY LTD (ACN 082 179 191) First Applicant ANDREW FURMINGER Second Applicant
AND:	AMPLIFIED CONTRACTORS PTY LTD (ACN 619 872 472) First Respondent ADAM BRAIN (and another named in the Schedule) Second Respondent
AND BETWEEN:	AMPLIFIED CONTRACTORS PTY LTD (ACN 082 179 191) (and others named in the Schedule) First Cross-Claimant
AND:	APF WELDING PTY LTD (ACN 082 179 191) (and another named in the Schedule) First Cross-Respondent

ORDER MADE BY:	MCELWAINE J
DATE OF ORDER:	26 AUGUST 2022

TAD 13 of 2021
Third Respondent	ANDREW WICKS
Cross-Claimants
Second Cross-Claimant:	ADAM BRAIN
Third Cross-Claimant:	ANDREW WICKS
Cross-Respondents
Second Cross-Respondent	FURMINGER SUPERANNUATION PTY LTD (ACN 636 800 578) AS TRUSTEE FOR THE FURMINGER SUPERANNUATION FUND